Residential properties for sale on Amelia Island and the surrounding areas while offering information regarding home sales, market conditions and real estate related articles. Also providing a information on Bank owned properties and REO selection. John Holbrook 904-415-0171 & Partners
Tuesday, February 21, 2012
Citibank settles mortgage lawsuit
Citigroup agreed Feb. 15th to pay $158 million to settle a lawsuit over bad loans that the bank passed on to the Federal Housing Administration to insure. The whistle-blower who originally brought the case, Sherry Hunt, an employee of Citi's mortgage department, said the company actively undermined the process that was supposed to check for fraud in order to push through reckless loans and get higher profits.
The suit itself makes for good reading. We've pulled out the juiciest bits, and explain just what Citi appears to have been doing. Some background: The FHA insures one-third of the mortgages loans in the country, taking on the risk of homeowners' default from lenders like Citi. The government requires lenders to certify that insured loans meet FHA standards.
Citi appears to have flouted those standards. According to the lawsuit, the bank passed along subpar loans to the FHA until very recently, making "substantial profits through the sale and/or securitization of FHA-backed insured mortgages" while "it wrongfully endorsed mortgages that were not eligible."
In the settlement, Citi, which was bailed out by taxpayers in 2008 to the tune of $45 billion, "admits, acknowledges, and accepts responsibility" for passing on bad loans.
John Holbrook - Realtor Amelia Island, Fernandina Beach & Yulee, Florida
Cell: 904-415-0171 Email: firstname.lastname@example.org Web: www.nassaumls.net